UK Tax Debt Exceeds GBP17 Billion

Wed, 10 Jun 2009

HM Revenue and Customs has been criticised over the way it handles tax debts after a report by MPs revealed that almost a third of all tax payments are late.

According to the Committee of Public Accounts, £17.3 billion in unpaid taxes is owed to the government, a debt figure which soared by 22 per cent over the 2007-08 financial year.

But despite the "enormous" debt, the committee said HMRC had been slow to introduce methods used by other organisations to manage debts .

Edward Leigh, chairman of the committee, called on the department to try "every means it can" to tackle the growing problem of tax debt, while also making allowances for people and businesses that were in temporary financial difficulties .

"HMRC has been slow to take advantage of the key techniques used by other organisations to manage debt owed to them," he said.

"It has started to make more methods of payment available to taxpayers, such as credit cards and direct debits, but it could take advantage of the latest developments in payment technology."

"Its debt collection activities also tend to be conducted on a 9 to 5 basis which is not always the best way of contacting tax debtors."

Mr Leigh added: "The department has decided that it cannot afford a new IT system to link all the tax records of an individual taxpayer. But linking of debts is crucial to effective debt management and HMRC should introduce a staged programme towards that end.

In the report, MPs also called on HMRC to do more to "change the behaviour" of taxpayers who persistently pay late.

They recommend the department offers newer methods of payments and starts to risk score its debtors, which would enable it to tailor the help it offers to people who do not understand what they have to pay or who are in financial difficulties, while dealing promptly with those who deliberately pay late.
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